Behind the Headlines
The middle market stands to benefit more than most from tech disruption in supply chains
Week of February 25, 2019
Digital supply chain innovation and adoption of technology to improve processes are gathering pace at an impressive speed. We sat down with Drew McElroy, CEO of Transfix, a digital freight brokerage, to understand the impact of this transformation on supply chains and how it is affecting middle market companies.
Transfix was launched in 2013 so it has been in the marketplace longer than most logistics technology providers and has seen a evolution in the attitudes of customers and incumbent players in the market. As McElroy noted, “Nobody debates anymore whether digital freight is better than analog – that ship has sailed long ago. Now our conversations with customers have moved on to specifics and how to roll out digital transformations.”
Transfix has seen rapid adoption among large enterprise Fortune 250 companies, who typically have been able to embrace new technology more easily due to the scale of their SCM teams. However, he believes that the middle market is where companies like Transfix can offer the most ROI. “The benefits of digital platforms are much bigger for middle market companies because of the delta with their existing supply chain systems. We’re providing access to a virtual network that creates scale and efficiency for middle market companies.”
Middle market supply chain teams often struggle with being less sophisticated and smaller than their large company counterparts. “We’re offering cost savings and no capital investment upfront, so it’s less risky for these smaller to medium sized supply chain teams to start their digital journey. We’re able to help companies improve their supply chain performance both operationally and financially – plus there are additional customer service benefits that our platform provides,” McElroy explained.
The potential to disrupt supply chains is attracting a proliferation of technology startups and their valuations are raising eyebrows as the fundraising numbers continue to soar. McElroy commented, “I don’t think valuations are ‘out of control’, they are aggressive. But they represent the potential and scope of the opportunity that investors see in digital disruption within the freight markets.”